Cineplex posts first quarterly profit since pandemic as Top Gun fuels box office boom

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Cineplex Inc. CGX-T is in the danger zone – and for the first time in more than two years, that is good news.

Helped by blockbuster box-office returns for the new Top Gun: Maverick, Canada’s largest movie theatre chain on Thursday reported its first quarterly profit since before the pandemic began.

Cineplex reported net income of $1.3-million or 2 cents a share in the three months ending June 30, compared to a net loss of $103.7-million or $1.64 a share in the same period last year.

Cineplex’s theatre attendance was 10 times higher than at the same time in 2021, with 11.1-million visits in the quarter. Other big titles also helped to draw audiences, such as Doctor Strange in the Multiverse of Madness and Jurassic World Dominion.

“You can’t see it in your home,” Cineplex chief executive officer Ellis Jacob said in an interview Thursday, referring to the new Top Gun. “It’s a whole different experience.”

It’s a message Mr. Jacob is keen to repeat after seeing theatre attendance decimated during the pandemic. As people stayed home, Hollywood studios responded by releasing films on streaming services or delaying them altogether. Even as cinemas are opening up again, studios have been experimenting with shorter theatrical “windows,” or the time when movies are available exclusively on the big screen before moving to streaming or video-on-demand rentals.

But recently some big names in the industry have been speaking out about the continuing importance of movie theatres. At the Cannes Film Festival in May, Top Gun star and co-producer Tom Cruise told an audience that he refused to release the movie on streaming services, even as its theatrical premiere was pushed back multiple times due to COVID-19. The long-awaited sequel was originally slated for release in June, 2020.

“I make movies for the big screen,” the high-wattage star told the audience.

And on a recent earnings call, Warner Bros. Discovery chief executive David Zaslav said the company was taking “aggressive steps to course-correct” an earlier strategy to release movies on streaming services on the same day that they hit the multiplex. A big-screen release provides marketing buzz that helps movies reach more audiences, Mr. Zaslav said.

“The studios are realizing that the theatrical release … creates the brand, it creates the value,” Mr. Jacob said. “Yes, the window will be shorter. It’s not going to be what it was. But I don’t think it will depreciate significantly from where they’re talking – which is about 45 days at a minimum.”

Mr. Jacob also praised the Top Gun star for his dedication to promoting big screen releases, recalling the buzz that resulted when Tom Cruise hosted an event with Cineplex in Toronto to promote Mission: Impossible – Fallout in 2018. (The seventh Mission Impossible instalment is slated for next summer.)

“He was quite impressive. If everybody in the movie exhibition business promoted their films like he does, we would be in a much stronger position,” Mr. Jacob said. “But that will happen.” For example, director James Cameron is “very driven” to promote the Avatar sequel coming in December, he added.

Theatre owners are looking forward to some high-profile releases still to come this year: Mr. Jacob cited the George Clooney-Julia Roberts vehicle Ticket to Paradise, and the sequels Black Panther: Wakanda Forever and Avatar: The Way of Water among the most anticipated films.

But the movie industry’s recovery is just beginning. Some major releases were pushed back even further from this year to next, RBC analyst Drew McReynolds pointed out in a research note on Thursday, anticipating the “first full year of normal operations” in 2023.

Cineplex reported total revenues of $349.9-million in the second quarter, which was still below 2019 levels but up 438.9 per cent compared to the same period last year.

Box office revenues per visitor increased to $12.29 compared to $10.89 at the same time last year, when the company’s higher-priced VIP theatres were closed, and other premium offerings such as 3D films were not available. Concession revenues also increased to $8.84 per visitor compared to $7.86 last year.

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